Election presentation

Representation ElectionMay 15, 2014 - June 12, 2014

Voting Methods

Internet

Voting Methods

Internet

Telephone

Voting Methods

Internet

Telephone

Instructions delivered from NMB via US Mail

Voting Methods

Internet

Telephone

Vote is FINAL once cast

Ballot Choices

International Brotherhood of Teamsters

Ballot Choices

Frontier Airline Pilots Association

Ballot Choices

Write-In

Ballot Choices

Write-In

No Representation

Voter Eligibility

673 Pilots Employed as of 12/15/2013

Voter Eligibility

Probationary Pilots - eligible

Voter Eligibility

Management Pilots - ineligible

Voter Eligibility

Retired - ineligible

Voter Eligibility

Separated for any reason - ineligible

Voter Eligibility

Separated for any reason - ineligible

Leaves of Absence - eligible* Unless working for another carrier

Determination of Winner

Majority of votes cast

Only valid ballots will be counted

Voter’s intent for representation must be clear

Blank ballots and “Non Votes” - VOID

Run-Off Election?

Only if no option receives a majority of vote

Run-Off Election?

2 options receiving largest # of votes

Run-Off Election?

No “write-in” option

Run-Off Election?

No “write-in” option

Option receiving highest # of votes wins

Reality

FAPA & IBT are on ballot

Reality

FAPA & IBT are on ballot

ALPA “write-in” ?

FAPA - Track Record

Track record providing effective representation

FAPA - Track Record

Based solely on best interests of Frontier Pilots

FAPA - Track Record

Survived bankruptcy with CBA largely intact

FAPA - Track Record

• No work rule changes

FAPA - Track Record

• Furlough mitigation via VLOA

FAPA - Track Record

• Unsecured creditors claim

FAPA - Track Record

• Unsecured creditors claim

• Seat at table (UCC)

FAPA - RAH Acquisition

Overriding goal of keeping Frontier separate

• Keep seniority list separate

• Keep CBA separate

IMSL was a disaster, BUT….

• FAPA fought for Airbus fence

• FAPA limited impact on day-to-day lives

• FAPA fought for Airbus fence

FAPA - 2011 Restructuring

Frontier Airlines at risk of liquidation

Tentative Agreement

• LOA 67 allowed Frontier to survive

Tentative Agreement

• Commercial Agreement provided “skin in the game”

Tentative Agreement

• Contractual commitment by RAH to sell Frontier

Tentative Agreement

• FAPA limited impact on day-to-day lives

• Contractual commitment by RAH to sell Frontier

Tentative Agreement

FAPA - LOA 67

Deferred previously negotiated snap-backs

FAPA - LOA 67

Temporarily reduced 401k match

FAPA - LOA 67

Temporarily froze longevity

FAPA - LOA 67

Temporarily reduced vacation/sick accrual

FAPA - LOA 67

Extended amenable date of CBA to 2017

FAPA - LOA 67

Extended amenable date of CBA to 2017

Total Value: ~$53 Million

FAPA - Commercial

Agreement

FAPA - Commercial

Agreement

Structured LOA 67 as investment

FAPA - Commercial

Agreement

• Equity

FAPA - Commercial

Agreement

• Equity

• Profit Sharing

FAPA - Commercial

Agreement

• Equity

• Profit Sharing

• Deadline to sell Frontier

(12/31/2014)

FAPA - Commercial

Agreement

• Equity

• Profit Sharing

(12/31/2014)

Formed FAPA Invest for Frontier Pilots

FAPA - Commercial

Agreement

• Equity

• Profit Sharing

(12/31/2014)

• Protect Investment Interests

FAPA - Commercial

Agreement

• Equity

• Profit Sharing

(12/31/2014)

• Protect Investment Interests

• Return to those who invested

FAPA - “Investment” Return

$1.7 Million in Cash

Paid in December 2013

$3.5 Million Profit Sharing Buyout

4 annual payments starting April 2013

$3.5 Million Profit Sharing Buyout

4% Equity Ownership of Frontier Airlines

4 annual payments starting April 2013

FAPA - Equity Value?

4% of Initial Public Offering

- or -

4% cash payment based on valuation

- or -

• if no “Change of Control” by 2020

- or -

• if no “Change of Control” by 2020

• based on Frontier Airlines valuation

as determined by 2 independent auditors

FAPA - 4% of What?

Conservative estimate of IPO?

FAPA - 4% of What?

$1 Billion

FAPA - 4% of What?

$1 Billion $40 Million to Frontier Pilots

FAPA - 4% of What?

Spirit Airlines Market Cap at IPO?

$1 Billion $40 Million to Frontier Pilots

FAPA - 4% of What?

$1 Billion

~ $825 Million

$40 Million to Frontier Pilots

FAPA - 4% of What?

$1 Billion

~ $825 Million

• 35 Airplanes

FAPA - 4% of What?

$1 Billion

~ $825 Million

• 35 Airplanes

• Q1 Revenue ~$233M

FAPA - 4% of What?

$1 Billion

~ $825 Million

• 35 Airplanes

• Q1 Revenue ~$233M

• Frontier Revenue: $327M

Final Qtr.

Reported

under RJET

Comparison

FAPA - Equity

Appreciation?No guarantees

FAPA - Equity

Appreciation?No guarantees, BUT…..

FAPA - Equity

• Indigo pioneered ULCC model at Spirit

FAPA - Equity

• Spirit was an unproven model to Investors

FAPA - Equity

• Spirit was smaller than Frontier

FAPA - Equity

• Indigo seeks to replicate success at Frontier

FAPA - Equity

• Indigo seeks to replicate success at Frontier

So how has Spirit performed as an investment?

Spirit Appreciation

Over 450%

in 3 years!

Spirit Pilot Equity?

0% - They gave it up

0% - They gave it up What if they hadn’t?

Why support FAPA?

Proven Effective as Independent Union

Why support FAPA?

• Focused 100% on Frontier Pilots Interests

Why support FAPA?

• Maintain autonomy

Why support FAPA?

• Insulated from short-term risks of ALPA

Why support FAPA?

• Leverage to negotiate future merger with ALPA

Why support FAPA?

• Leverage to negotiate future merger with ALPA

• X-factor

Pilot Concerns with FAPA?

Contentious History

• FAPA 2.0 - New philosophy & attitude

Contentious History

FAPA has always given in to pressure

Contentious History

• Gun to head? Bankruptcy 1113/RAH Restructuring

Contentious History

Small fish in big pond

Contentious History

• Same situation if ALPA

Contentious History

Indigo will dominate FAPA

Contentious History

Indigo will dominate FAPA

• Why? CBA intact until 2017

FAPA ALPA

1.65% 1.9%

FAPA ALPA

1.65% 1.9%

$1,237,500 $1,425,000

ALPA Considerations

50,000 strong?

ALPA Considerations

50,000 strong?

• Competing interests

ALPA Considerations

50,000 strong?

• Conflicts of interest

ALPA Considerations

50,000 strong?

• ALPA National must balance those

interests

ALPA Considerations

50,000 strong?

interests

• Likelihood of DFR’s

ALPA Considerations

50,000 strong?

interests

• Likelihood of DFR’s

• Please talk to former ALPA pilots

ALPA Considerations

50,000 strong?

• Multiple DFR lawsuits

ALPA Considerations

50,000 strong?

• TWA vs. ALPA

ALPA Considerations

50,000 strong?

• TWA vs. ALPA

Settled on 1/23/2014

ALPA Considerations

50,000 strong?

• TWA vs. ALPA

$53 Million in damages

ALPA Considerations

50,000 strong?

• TWA vs. ALPA

$53 Million in damages$27 Million in ALPA funds

$26 Million - Reinsurers

ALPA Considerations

50,000 strong?

• TWA vs. ALPA

• CAL Pilots vs. ALPA

ALPA Considerations

50,000 strong?

• TWA vs. ALPA

CAL argues conflict of interest

ALPA Considerations

50,000 strong?

• TWA vs. ALPA

ALPA favored UAL pilots

ALPA Considerations

50,000 strong?

• TWA vs. ALPA

ALPA favored UAL pilots

ALPA concerns of losing UAL

ALPA Considerations

50,000 strong?

• TWA vs. ALPA

• Airtran Pilots vs. ALPA

ALPA Considerations

50,000 strong?

• TWA vs. ALPA

Related to SWA merger

ALPA Considerations

50,000 strong?

• TWA vs. ALPA

9 DFR Counts

ALPA Considerations

50,000 strong?

• TWA vs. ALPA

9 DFR Counts

Seeking $200K/Pilot/Count

ALPA Considerations

50,000 strong?

• TWA vs. ALPA

• Eagle vs. ALPA

ALPA Considerations

50,000 strong?

• TWA vs. ALPA

• Eagle vs. ALPA

Filed 3/31/2014

ALPA Considerations

50,000 strong?

• TWA vs. ALPA

• Eagle vs. ALPA

Filed 3/31/2014

Claim ALPA favored APA

ALPA Considerations

50,000 strong?

• TWA vs. ALPA

• Eagle vs. ALPA

There are others!

ALPA Considerations

50,000 strong?

• DAL & UAL pilots leaving?

ALPA Considerations

50,000 strong?

• Delta - 11723 Pilots

ALPA Considerations

50,000 strong?

• 5800+ have signed NMB cards

ALPA Considerations

50,000 strong?

• 6500 is goal to file dispute

ALPA Considerations

50,000 strong?

• 6500 is goal to file dispute

• Estimated ALPA Dues: $38M

ALPA Considerations

50,000 strong?

• United - 12505 Pilots

• Estimated ALPA Dues: $40M

ALPA Considerations

50,000 strong?

• Majority of rest are regionals

ALPA Considerations

50,000 strong?

Airtran ASA CommutAir ExpressJet Jazz Piedmont

Air Transat Bearskin Compass FedEx JetBlue PSA

ATI Calm Air Endeavor Air First Air Kelowna Spirit

Air WisconsinCanadian

NorthEnvoy Air Hawaiian Mesa Sun Country

Alaska CanJet Evergreen Island AirNorth

AmericanTrans States

ALPA Considerations

50,000 strong?

ALPA Merger Policy?

ALPA Considerations

50,000 strong?

• A Framework for discussion

ALPA Merger Policy

ALPA Considerations

50,000 strong?

ALPA Merger Policy

• Not controlling (Allegheny-Mohawk)

ALPA Considerations

50,000 strong?

ALPA Merger Policy

• Not controlling (Allegheny-Mohawk)

No Guarantees

• 2 ALPA MEC’s Negotiate

• Mediate

• Arbitrate

• Allegheny-Mohawk

• Delta-Northwest ended up in

arbitration

• Midwest?

ALPA Insurance Benefits

Loss of License Insurance

• Inferior to Frontier Pilot LTD plan(s)

Replaces less income

Limited Duration

Longer Elimination Period

Short Term Disability

Limited Duration

• Inferior to Frontier STD plan

Limited Duration

Insurance Comparison

Short Term Disability FAPA ALPA

Cost (assume $80k

annual income)

Coverage

STD Elimination Period

Duration

Cost (assume $80k

annual income)$35.08/month

Coverage

Duration

Cost (assume $80k

annual income)$35.08/month $42.46/month

Coverage

Duration

Cost (assume $80k

Coverage

Duration

$37.38/month

for 60 day

elimination

Cost (assume $80k

Coverage $1500/week

Duration

Cost (assume $80k

Coverage $1500/week $1000/week

Duration

Cost (assume $80k

STD Elimination Period 15 days

Duration

Cost (assume $80k

STD Elimination Period 15 days 30 or 60 days

Duration

$37.38/month

for 60 day

elimination

Cost (assume $80k

Duration 11 weeks

Cost (assume $80k

Duration 11 weeks 52 weeks

Cost (assume $80k

Duration 11 weeks 52 weeks

Long Term Disability FAPA(LTD)

ALPA(Loss of License)

Cost (assume $80k

annual income)

Coverage

Elimination Period

Duration

Cost (assume $80k

annual income)No Charge

Coverage

Elimination Period

Duration

Cost (assume $80k

Coverage

Elimination Period

Duration

Company pays

Union Dues pay

Cost (assume $80k

annual income)No Charge $151.67/month

Coverage

Elimination Period

Duration

Cost (assume $80k

Coverage

Elimination Period

Duration

~$250.00

Company pays

Union Dues pay

Cost (assume $80k

Coverage $5000/month

Elimination Period

Duration

Cost (assume $80k

Coverage $5000/month $4800/month*

Elimination Period

Duration

Cost (assume $80k

Elimination Period

Duration

* $2400 after 2 years

Cost (assume $80k

Elimination Period 90 days

Duration

Cost (assume $80k

Elimination Period 90 days 365 days

Duration

Cost (assume $80k

Duration to age 65

Cost (assume $80k

Duration to age 65 4 years*

Cost (assume $80k

* Option to extend

at additional cost

Cost (assume $80k

ALPA(Loss of License PLUS)

Cost (assume $80k

Duration to age 65

Cost (assume $80k

Duration to age 65

Cost (assume $80k

Coverage $5000/month $4800/month

Duration to age 65

Cost (assume $80k

Duration to age 65

Years 1 & 2

Cost (assume $80k

Duration to age 65

Years 3+

Cost (assume $80k

Duration to age 65

Cost (assume $80k

Duration to age 65 to age 65

Cost (assume $80k

Duration to age 65 to age 65

ALPA Considerations?

Experience & Strength with Indigo

• Study Spirit’s ALPA Contract

• Spirit Struck

• Adversarial relationship

• Spirit Struck

Well documented

“Maximum Cost” Grievance Process

• Spirit Struck

• Going to “roll over” FAPA

Well documented

• Spirit Struck

Well documented

Contract not amenable until 2017

• Spirit Struck

Well documented

Snap-backs on track

• Spirit Struck

Well documented

Snap-backs on track

Leverage?

Resources

• Get what you pay for

Resources

• Big carriers get “A-Team”

Resources

• Delta, United & FedEx are the big dogs

Resources

• Trickles down from there

Resources

• Trickles down from there

• Please seek feedback from peers who previously

worked under ALPA representation

Oversight

• ALPA National represents multiple interests

Oversight

• ALPA National determines level of resources

Oversight

• FAPA C&BLs provide mechanism for oversight

Oversight

Any active member may bring business before the BOD

Oversight

Any member may petition membership for change

Oversight

BOD is bound by majority vote of active members

Oversight

BOD is bound by majority vote of active members

Officer recall procedures

VOTE FAPA!

Proven Effective

Ready to roll

Better Insurance

Lower Dues

100% of Resources Support Frontier Pilots

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